Wiz’s decision to decline Google’s acquisition offer could significantly impact Microsoft and the broader tech industry. Google had aimed to acquire the Israeli cybersecurity startup Wiz for $23 billion, but Wiz’s CEO, Assaf Rappaport, announced on Tuesday that they would not proceed with the deal. Rappaport stated that the decision was difficult but necessary for Wiz to focus on achieving $1 billion in annual revenue and pursuing an initial public offering (IPO).
This acquisition would have strengthened Google’s cybersecurity division, especially following a massive outage last week linked to the cybersecurity giant CrowdStrike. Analyst Dan Ives from Wedbush noted that concerns from investors and ongoing antitrust issues were key factors leading to the agreement’s failure. Google has been under intense scrutiny concerning antitrust practices and has recently concluded a major trial related to a lawsuit from the Department of Justice.
Ives conveyed in a note to investors that the fallout from this deal not occurring would have sector-wide effects. He believes that Google will likely intensify efforts to expand its cybersecurity capabilities, a sentiment echoed for Microsoft’s strategy as well.
Ives suggested that there is a pressing need for consolidation within the cybersecurity sector and that Microsoft might pursue strengthening its own cybersecurity platform in the coming 12 to 18 months. Microsoft faced scrutiny following significant global IT disruptions caused by a faulty CrowdStrike update. The incident led to widespread issues, affecting businesses, travel, and government operations, highlighting vulnerabilities in Microsoft’s cybersecurity framework.
Even though Ives considers CrowdStrike to be a leader in cybersecurity, the recent outage may indicate a pressing need for Microsoft to enhance its cybersecurity measures, especially in light of Google’s halted acquisition.